POWER SOLUTIONS INTERNATIONAL, INC. (PSIX): what the price assumes
In the published model solve dated 2026-Q2, anchored at $33.10, POWER SOLUTIONS INTERNATIONAL, INC. (PSIX) is priced for today's economics sustained for ~6.7 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.
Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/PSIX
Headline
| Field | Value |
|---|---|
| Ticker | PSIX |
| Company | POWER SOLUTIONS INTERNATIONAL, INC. |
| Current price | $33.10/sh |
| Composition | Power Systems 81% / Industrial 16% / Transportation 3% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 5.1% |
| Operating margin today | 13.5% |
| Margin compression (value-band) | -8.4pp |
| Must persist for | 6.7y |
| Multiple paid | 9x operating income |
The operating-margin figure is value-band context at year 11: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 16.5% cost of capital; growth searched up to the 25.6% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.25σ |
| cohort percentile (of 221 peers) | 3 |
| sustained it ~6.7 years at this level | 22% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and relative-multiple and growth-DCF value, while earnings-power lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.69x | 5 | justifies |
| Earnings | 1.90x | 5 | expensive |
| Relative | 0.43x | 5 | justifies |
| Growth | 0.69x | 3 | justifies |
Families that justify the price: Asset, Relative, Growth Families that call it expensive: Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.6%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $69.41 | 0.48x | yes | FCF base $0.0B, growth 25% (input: historical growth), terminal g 4.0%, WACC 8.6%, 7yr projection |
| DCF Exit Multiple | Growth | $46.27 | 0.72x | yes | Exit EV/EBITDA: 5.0x / 8.0x / 11.0x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $61.61 | 0.54x | yes | P/E 13.79x (blended: static sector reference 18x + trailing (TTM) 7x), scenarios: 11.0x / 13.8x / 16.5x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $47.91 | 0.69x | yes | BV/sh $8.06, ROE (TTM) 55.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $149.86 | 0.22x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $48.03 | 0.69x | yes | Rev $0.7B, growth 30% (input: historical growth; tapered), Terminal P/S: 0.9x / 1.1x / 1.3x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $114.12 | 0.29x | yes | EPS $4.43, growth 26% (input: historical EPS growth), PEG=0.29 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $17.44 | 1.90x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.05B × (1−25%) / WACC 8.6% → EPV (no growth) |
| Residual Income | Asset | $78.15 | 0.42x | yes | BV $8.06 + 5yr PV of (ROE (TTM) 55.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $28.34 | 1.17x | yes | √(22.5 × EPS $4.43 × BVPS $8.06) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $49.87 | 0.66x | yes | EBITDA $0.10B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $15.07 | 2.20x | yes | FCF $34.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $14.74 | 2.25x | yes | SBC-adj FCF $0.03B (FCF $0.03B − SBC $0.00B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $142.94 | 0.23x | yes | EPS $4.43 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $3.79 | 8.73x | yes | BV $8.06 × (ROIC 4.1% / WACC 8.6%) |
| P/Sales Sector | Relative | $77.56 | 0.43x | yes | Revenue $0.72B × sector P/S 2.5x |
| PEG Fair Value | Relative | $166.13 | 0.20x | yes | EPS $4.43 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $47.89 | 0.69x | yes | EPS $4.43 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Power Solutions International (consolidated) | operating | enterprise | 0.7B reported-currency | — | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $60.5m |
| Net debt / NOPAT (after-tax) | 0.84x |
| Net debt / operating income (pre-tax) | 0.63x |
| Interest coverage | 14.4x |
| Share count CAGR (dilution) | 0.1% |
| Burning cash | no |
Bullet Takeaways
- This is a cyclical engine and power-systems maker priced as a value name, not a growth bet. At about $40 it trades near 11 times operating income, and the asset, relative-multiple, and growth frames support the price while only earnings-power reads it as expensive.
- The balance sheet is healthy for a small-cap industrial: net debt is well under one times operating income and interest coverage is above 12 times, so the company has room to absorb a soft patch.
- The first quarter of 2026 was a clear miss, with revenue down 5% to $128.6 million and profit falling 62% on margin compression. Management is pointing to a second-half recovery tied to larger Power Systems orders and data-center demand.
Bull Case
Valuing an engine maker is tricky because the end markets are cyclical and lumpy, so a single quarter tells you little about the through-cycle earnings power. That is the lens that matters for Power Solutions International. The business sells power systems, with industrial and transportation lines alongside, and roughly 81% of revenue sits in Power Systems. Demand is shifting in the company's favor: the 10-K points to "stringent regulations and growing efforts to reduce emissions" that are "driving demand for clean energy and alternatives to diesel power engines" along with "microgrids and demand response equipment" (FY2025 10-K, accession 0001628280-26-013207). A company positioned in cleaner stationary power, at the moment data centers are scrambling for on-site generation, is fishing where the fish are.
The value case is grounded in the numbers, not a story. At about 11 times operating income, the asset frame, the relative-multiple frame, and the growth-DCF all support the price; only earnings-power reads it as expensive. The current operating margin is a healthy 13.5%, and the inversion implies the company only needs to hold modest margins for about seven years to justify the price, a pace within what it has recently delivered. The reasonable-growth band centers near $26 with a high around $38, so the current price sits in the upper part of its own fair band rather than miles above it. For a profitable cyclical with a real product and real engineering, that is a reasonable place to be paying.
The balance sheet gives the company the staying power a cyclical needs. Net debt is well under one times operating income, and interest coverage runs above 12 times, so a soft first half does not threaten the business. The 10-K describes a customer base of OEMs and "direct end-users across a wide range of applications that demand high product quality, best-in-class engineering support and on-time delivery" (accession 0001628280-26-013207). That engineering-led positioning is what lets the company win the larger Power Systems orders management expects in the second half. If data-center and industrial demand firm as guided, the earnings recover off a low base and the value case pays off.
Bear Case
The advantage Power Solutions has been leaning on, exposure to booming power demand, is more fragile than the headline suggests, and the first quarter showed where the erosion starts. Revenue fell 5% year over year to $128.6 million, well short of the roughly $164 million expected, and profit dropped 62% as margins compressed. The causes are telling: a lower mix of oil and gas products plus elevated production costs from ramping capacity for data-center applications in Wisconsin. In other words, the business that was supposed to be the growth driver is costing margin to build out, while the legacy oil and gas demand that has been carrying the company is uneven.
That oil and gas dependence is the real concentration risk. The 10-K discloses that "$193.9 million and $105.5 million of its 2025 and 2024 net sales, respectively, were attributable to the sale of products used within the oil and gas industry" (FY2025 10-K, accession 0001628280-26-013207). A swing that large in one cyclical end market is the swing factor for the whole company, and it is outside management's control. Data-center orders are described as uneven, so the narrative that one secular tailwind cleanly replaces a volatile one is not yet proven by the order book. A company whose growth story depends on lumpy large orders is a company whose quarters will keep surprising.
The moat is also thinner than an established engine brand might imply. The company competes on "high product quality, best-in-class engineering support and on-time delivery" (accession 0001628280-26-013207), but it sells into markets where much larger, better-capitalized engine and generator makers operate, and where buyers can dual-source. The emissions-driven shift toward cleaner power is a tailwind for the category, not a proprietary advantage for this company specifically. With the price already supported only by the more optimistic valuation frames and earnings-power flagging it as expensive, a second-half recovery that slips, or another quarter of capacity-ramp drag, would remove the cushion quickly. The stock is priced for the recovery to arrive, not to be delayed.
Valuation
Power Solutions is best read as a cyclical industrial valued near the value end of the spectrum. At about $40 the price is roughly 11 times company-wide operating income, which inverts to growth held at a self-funding ceiling for about seven years, computed at a 15.6% cost of capital. The high discount rate reflects the volatility of the end markets. The current operating margin is a solid 13.5%, and the inversion only requires modest margins to persist, so the bet is on duration of decent profitability rather than on a sharp acceleration.
The family spread marks this as asset-supported, not a growth story. The asset frame, the relative-multiple frame, and the growth-DCF all sit at or below the current price and effectively support it, while the earnings-power frame reads the price as expensive. That mix is typical for a profitable cyclical at a point in the cycle: the no-growth earnings floor looks light because earnings are depressed, while the asset value and peer multiples carry the valuation. The reasonable-growth band runs from a low near $19 to a base around $26 and a high near $38, which places the current price above the base but inside the upper band.
The honest framing is that a buyer here is paying a fair-to-full price for a cyclical whose near-term earnings have just stumbled. The balance sheet is sound, with low leverage and strong interest coverage, so the risk is to earnings and the multiple rather than to solvency. The price assumes the second-half recovery management has guided arrives and that data-center demand becomes a durable contributor rather than a lumpy one. That is a reasonable bet at this multiple, but it is a bet on a recovery, and the methods give limited support above the current level if the recovery disappoints.
Catalysts
The near-term setup is a recovery story management has put on the calendar. First-quarter 2026 results, reported May 11, missed badly: revenue of $128.6 million was down 5% year over year and well short of the roughly $164 million expected, EPS of $0.36 missed the $0.75 estimate, and profit fell 62% on margin compression. Management guided second-quarter revenue to be roughly consistent with the first quarter and pointed to stronger second-half sales, approximately in line with the second half of 2025, driven by larger Power Systems orders. The next two earnings reports are the tests of whether that back-half recovery materializes.
The data-center theme is the swing catalyst. The company is ramping capacity in Wisconsin to serve data-center power applications, and the timing and size of those orders will determine whether the secular demand story translates into earnings. Watch the order book and any large contract announcements, since the business is driven by lumpy large orders rather than steady run-rate demand. Firming oil and gas activity would also help, given how much of the revenue base sits there.
The risks run through the same channels. Oil and gas made up a large share of 2025 sales, so a downturn in that end market hits results directly. Data-center orders have been uneven, so a delay pushes the recovery out. Capacity-ramp costs are pressuring margins now and could persist if volumes do not show up to absorb them. For a small-cap with lumpy revenue, any single quarter can swing the stock sharply, so the path of the second-half order book is the catalyst that matters most.
Peer Cohorts (Per Segment, With Filing Citations)
Power Solutions International (consolidated) (reported)
- WWD (WOODWARD, INC.)
- FY2025 10-K: …depots, third-party repair shops, and other end users. 2 Industrial Our Industrial segment designs, produces, and services systems and products for the management of energy in the form of fuel, air, fluids, gases, motion, combustion, and electricity. These products include actuators, valves, pumps, fuel injection…
- FY2025 10-K: …and customer applications, enabling it to develop and integrate cost-effective and state-of-the-art fuel, combustion, fluid, actuation, and electronic systems. Woodward focuses its solutions and services primarily on serving original equipment manufacturers ("OEMs") and equipment packagers, partnering with them to…
- BWXT (BWX Technologies Inc)
- FY2025 10-K: …is also given to personnel, strategy, research capabilities, organizational and business matters, adherence to discipline and other qualitative factors that may impact the ability to achieve desired investment results. 80 Table of Contents Domestic Plans We sponsor the following domestic defined benefit pension…
- FY2025 10-K: …financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized…
- CR (CRANE COMPANY)
- FY2025 10-K: …markets. The business designs and delivers proven systems, reliable components, and flexible power solutions that excel in tough and mission-critical environments. Products and services are organized into six integrated solutions: Sensing Components & Systems, Electrical Power Solutions, Fluid Management Solutions,…
- FY2025 10-K: …gain in the projected benefit obligation were primarily the result of an increase in the discount rate. Other sources of gains or losses such as plan experience, updated census data and minor adjustments to actuarial assumptions generated combined losses of less than 1 % of expected year end obligations. In the…
- SXI (STANDEX INTERNATIONAL CORP/DE/)
- FY2025 10-K: …Narayan Powertech Private Limited, and Mold-Tech Singapore Pte. Ltd., and Standex International Corporation and the Minority Shareholders listed therein 8-K 10/31/2024 (m) Second Amendment to Third Amended and Restated Credit Agreement dated as of December 6, 2024 by and among Standex International Corporation,…
- FY2025 10-K: …capabilities provide solutions to an array of markets and provide safe and efficient power transformation, current monitoring, and isolation, as well as switch, sensor and relay solutions to monitor systems for function and safety. The end-user of our engineered solution is typically an original equipment…
- SPXC (SPX TECHNOLOGIES, INC.)
- FY2025 10-K: …results of Crawford's Commercial Air Handling Equipment businesses will be reflected within our HVAC reportable segment. Crawford's Industrial & Transportation Products businesses, which includes businesses serving aerospace, defense, transportation, and marine markets, is non-core to our long-term strategy. These…
- FY2025 10-K: …0000088205 false 2025 FY P1M P1M P1M http://fasb.org/us-gaap/2025#OtherAssetsNoncurrent http://fasb.org/us-gaap/2025#OtherAssetsNoncurrent http://fasb.org/us-gaap/2025#AccruedLiabilitiesCurrent http://fasb.org/us-gaap/2025#AccruedLiabilitiesCurrent http://fasb.org/us-gaap/2025#OtherLiabilitiesNoncurrent…
- NVT (nVent Electric plc)
- FY2025 10-K: …solutions help protect operating environments for mission critical applications in infrastructure, industrial and commercial verticals. 22 • Electrical Connections -The Electrical Connections segment provides innovative solutions that connect power and data infrastructure. Our offerings enhance end-user safety,…
- FY2025 10-K: …timing and interpretation by tax authorities in affected jurisdictions. • The converging megatrends of the electrification of everything, sustainability and digitalization, including the increased use of artificial intelligence, have led to sales growth, particularly in the infrastructure vertical, which includes our…
- WTS (WATTS WATER TECHNOLOGIES INC)
- FY2025 10-K: $ 2.0 million of restructuring charges recognized in the Europe segment related to cost saving actions and primarily include severance costs. Included in "Other Actions" for the year ended December 31, 2023, was $ 1.1 million of restructuring charges recognized in the APMEA segment related to Enware Australia Pty…
- FY2025 10-K: …water solutions, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications. Most of our HVAC products and solutions feature advanced controls enabling…
- AAON (AAON, INC.)
- FY2025 10-K: …engineering, manufacturing, marketing, and sale of premium air conditioning and heating equipment consisting of standard, semi-custom, and custom rooftop units, data centers cooling solutions, cleanroom systems, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing…
- FY2025 10-K: …plc), York Light Commercial (Bosch Home Comfort Group), Johnson Controls (Johnson Controls International PLC), Carrier (Carrier Global Corporation), and Daikin (Daikin Industries). Our thermal management products primarily compete with Vertiv (Vertiv Holdings Co.), STULZ (STULZ Air Technology Systems, Inc.), Munters,…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.